Publish Date:
HSBC Mutual Fund has changed the fundamental attributes of its Multi Cap scheme ‘HSBC Multi Cap Equity Fund’ to recategorize it into a newly introduced Flexi cap fund category.
Going ahead, the new name of the scheme will be ‘HSBC Flexi Cap Fund’.
In an addendum released by the fund house, it has stated a few fundamental changes in the scheme, which includes the change in its category, its name, and a provision to create a segregated portfolio.
The investment objective of the scheme has been revised as ‘To seek long term capital growth through investments made dynamically across market capitalization (i.e. Large, Mid, and Small Caps). The investment could be in any one, two, or all three types of market capitalization. The scheme aims to predominantly invest in equity and equity related securities. However, in line with the asset allocation pattern of the scheme, it could move its assets between equity and fixed income securities depending on the view on these markets. However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.’
SEBI has defined flexi-cap fund as an open-ended dynamic equity scheme investing across large cap, mid cap, and small cap stocks.
Being categorized as a flexi cap fund, HSBC Flexi Cap Fund will have the freedom to invest across large cap, mid cap, and small cap stocks in any proportion. The corpus of the scheme will be invested in equity and equity related and various fixed income securities. The scheme will move its assets between equity and fixed income securities depending on the view on these markets
It will hold 65% to 100% of its assets in equities, 0% to 35% in Debt & Money Market instruments, and 0% to 10% in Units issued by REITs and InvITs.
HSBC Multi Cap Equity Fund was till now categorized as a Multi-cap Fund. It invests minimum 65% of its assets in equities spread across market caps, whereas upto 35% of its assets can be held in Debt & Money Market instruments.
Earlier, the multi cap funds had the freedom to invest across market capitalizations and sectors based on the view of the fund manager. However, in September 2020, the SEBI had defined new rules for multi-cap funds, which are required to invest at least 25% of the corpus each in large cap, mid cap and small-cap stocks.
In our view, the recategorization of HSBC Multi Cap Equity Fund to a flexi-cap will not have any significant impact on the way this fund is managed. Under the new category and name the fund will continue to follow its current investment strategy as it offers complete flexibility for the fund.
In addition, the fund house has also announced an inclusion of provision for creation of segregated portfolio for the debt portion of its portfolio, and investment in Units issued by REITs and InvITs.
Notably, after the SEBI allowed creation of segregated portfolios, almost all mutual fund schemes are creating an enabling provision of this nature in the debt portion of their schemes.
The new provision will be effected in the Scheme Information Document (SID) and Key Information Memorandum (KIM) of the scheme under the relevant section and will come into effect from January 28, 2021.